Mayor Coleen Seng announced today that the City has reached agreement with
Hy-Vee Inc. to begin redeveloping the north side of “O” Street between 50th
and 52nd streets with a $15 million, 78,000 sq. ft. supermarket. The
seven-acre redevelopment project will:

employ more than 400 people;

complete North 50th Street to connect “O” and “R” streets;

offer approximately 400 parking stalls.

The new store will be built on the former Park Place auto dealership site,
located at 50th and “O” streets.

“This will be a wonderful change for Lincoln residents,” Mayor Seng said.
“It is great that this project on the north side of ‘O’ Street can get
started while the street is under construction. The street will be done
before the store opens.”

“We are fully committed to the Lincoln market and are thrilled that area
residents soon will shop in a brand new 21st century store,” said Pat
Hensley, assistant vice president of operations for Hy-Vee’s Western
Region.

The new store will be more than double the size of the aging Hy-Vee store
at 70th and “O” streets, which it eventually will replace. It will cater
to the latest in shopping trends and services, including one-hour and
digital photo, drive-up pharmacy, a variety of dining opportunities, an
attached wine and spirits store and a bank. There will be expanded
departments of fresh-cut meat, organic produce and HealthMarket products,
gourmet salads and desserts and much more. The store also will feature a
Hy-Vee Club room for classes and meetings, and a baby department that
includes organic and natural products, plus a variety of equipment and
toys.

Hy-Vee, Inc. is an employee-owned corporation operating 224 retail stores
in seven Midwestern states. The company recorded total sales of $4.9
billion in 2005, ranking it among the top 20 supermarket chains and the top
35 private companies in the U.S.

The redevelopment agreement between the City and Hy-Vee will be presented
on June 26 at a City Council public hearing. Under the agreement, Hy-Vee
will purchase the seven-acre site and invest more than $15 million dollars
in building and site improvements. This week, Hy-Vee entered into a
contract with Abram LLC to purchase the site.

The City proposes using $751,000 of tax increment financing (TIF) generated
by the project improvements to assist in demolition, rough grading, utility
relocation and other public improvements in the declared blighted and
substandard redevelopment area. For every $1 of TIF funds spent, Hy-Vee
will invest more than $15 in private funds.

Under the redevelopment agreement, the City proposes to build two important
public projects in the area north of “O” Street. The City proposes to
complete 50th Street to connect “O” and “R” streets. Completion of this
street will improve traffic circulation in the 48th and “O” street area and
improve access to all the nearby stores north of “O” Street. The primary
costs of the North 50th Street connection are proposed to be funded by a
special assessment district, which assigns the cost to the adjacent
property owners, including Hy-Vee, on a pro-rata basis.

During construction of the grocery store, the City will also build a storm
sewer improvement project to reduce the localized flooding that occurs
during heavy rains. The storm sewer improvement will be north of the new
store site and also will help prevent flooding at the Quality Suites and
Doane College Lincoln campus properties.

Site preparation and construction of the private and public projects is
scheduled to begin by late fall of this year. The “O” Street widening
project is scheduled for completion at the end of November.

The City selected Hy-Vee, Pinnacle Bank and McCombs Commercial Realty as
the “developers of record” for the north side of “O” Street following a
competitive request for proposals. Yesterday, the other two redevelopers,
Pinnacle Bank and McCombs Commercial Realty, formally withdrew from the
project and encouraged the Mayor to proceed with the seven-acre Hy-Vee
plan.

The City will consider whether it is more viable to offer the remaining
area in the original redevelopment plan northeast of 48th and “O” as a
single project site or divide it into multiple project areas. It is also
possible with the heavy lifting done at 50th and “O,” that the private
sector is ready to develop the other corner.

Hy-Vee joins private sector construction already under way for Westgate
Bank, Braeda Restaurant, and Walgreen Drug store on the south side of “O”
Street east of 48th Street.